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Melora Soodalter works for in HBO's promotion department as a freelancer - but has her own office and works full time (2004). Freelancers, or self-employed people, face challenges in health care coverage, yet sometimes have the freedom to choose their own hours and vacation days.

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Amid a booming startup culture and an expanding freelance “gig economy,” self-employment is on the rise — especially among millennials. Estimates put the millennial self-employment rate at around 30%, a figure that will most likely go up over time.

While being self-employed has many benefits, such as greater flexibility and autonomy, there are drawbacks as well. A big one is extra taxes: Self-employed people have to pay twice as much in Social Security and Medicare taxes as employees do, in addition to their regular income tax, and that money isn’t withheld from their paychecks. Another is the lack of formal employee benefits that come with a traditional job, such as health insurance and a retirement plan.

I have a young client who recently made the switch from traditional employment to freelance work and was really struggling with paying the additional taxes while simultaneously losing his retirement plan.

The good news for this client — and many workers like him — is that there are fourretirement plans for self-employed workers that can help ease the strain by reducing your taxable income while putting money away for retirement. Which plan is best for you depends on multiple factors, including your income, your age, whether you have employees and your intentions for the retirement plan funds.

Here’s a review of the pros and cons of each type of plan.

Solo 401(k)

Pros of a Solo 401(k):

High contribution limits. Because you are both the employer and the employee, you can contribute more to a Solo 401(k) plan than you can to other retirement plans. As an employee, you can contribute up to $18,000 for the year (plus up to $6,000 in catch-up contributions if you’re over 50). As in a traditional 401(k), your contributions are made with pre-tax dollars. Then, as the employer, you can contribute up to 25% of your business’s total earnings (or 20% if you are a sole proprietor or single-member LLC) on top of the employee contribution until you reach a combined total amount of $53,000 (or $59,000 including catch-up contributions). Plus, employer contributions are deductible as a business expense.

Contribute double. With a Solo 401(k), you can hire your spouse and let him or her participate in the plan, too. Your spouse can contribute up to $18,000, and you can put in the typical employer contribution up to a total amount of $53,000. Your spouse can also make catch-up contributions, if eligible.

Tax deferred growth. As in a traditional 401(k), your contributions are pre-tax, and you pay tax on withdrawals.

Flexibility. You can put in as much, up to the limit, or as little as you want from year to year.

Cons of a Solo 401(k):

Paperwork. You must file a report with the IRS annually if you have at least $250,000 in your account.

Not open to everyone. You can open a Solo 401(k) only if you have no employees other than your spouse.

Bottom line: These plans are fabulous for self-employed people with no employees (other than a spouse) because of the high contribution limits, tax-deferred growth and flexibility in contribution amounts.

Smart strategy: If your self-employment income is not very high, you could use your low tax bracket to your advantage. In this case, you might choose to open a Roth Individual 401(k). With a Roth 401(k), you put in after-tax dollars, and they grow tax-free. Assuming that your tax bracket will be higher down the road, this strategy will save you money. Additionally, all the funds you withdraw in the future would be tax-free.

Simplified Employee Pension (SEP IRA)

Pros of a SEP IRA

Ease of creation and maintenance. All it takes is some basic paperwork to set up, and no annual reporting to the IRS is required.

High contribution limits. You can contribute up to 25% of the W-2 income you pay yourself, or just under 20% of your Schedule C net income, up to $53,000 for 2015. This is great because your contributions can grow with your profits.

Tax-deferral. You benefit from tax-deferred contributions and growth until you begin withdrawals. In general, you can start taking money out at age 59½. You don’thave to start withdrawals until age 70½.

Cons of a SEP IRA:

Contributions come only from the employer. If you have employees, you must include them all in the retirement plan, and you cannot contribute a higher percentage to your own account than you do to theirs. This can get expensive.

Bottom line: These plans are best for self-employed workers who have very few or no employees and want flexibility in the amount they put away (for example, they want to tie contributions to profits).

Cons of a SIMPLE IRA:

Possibility of mandatory matching contributions. As the employer, you can choose to make either a fixed 2% contribution to employee accounts, or match employee contributions of 1% to 3% of total pay. Most employees do not contribute to such plans, so it is unlikely that choosing to match would cost you much.

Lots of rules. For two years after your initial contribution, you cannot transfer your SIMPLE IRA into any other retirement plan. In addition, if you are under age 59½, any distribution you take in the first two years will be subject to a 25% penalty.

Contributions count against 401(k) contributions. If your self-employment is an on-the-side gig and you have a 401(k) from your other job, any contributions you make to your SIMPLE will count against the $18,000 you could otherwise defer into your 401(k) for that year.

Limited to small businesses with fewer than 100 employees. However, this is not an issue for most self-employed millennials.

Bottom line: These plans are particularly attractive for small businesses with lots of employees (who usually don’t contribute, hence no match or employer cost). At the same time, the employers can get a 3% match based on income.

Defined benefit plan

These plans, reminiscent of the old-school pension plans that our grandparents’ generation had, are actually wonderful for certain self-employed workers.

Pros of a defined benefit plan:

Very high contribution limits. How much you can contribute depends on your age, but you could potentially put away more than $100,000 per year for retirement.

Can be combined with other plans. You can contribute to a defined benefit plan while simultaneously contributing to a 401(k) or SEP IRA.

Lower taxes. Contributions can be written off as business expenses, thereby reducing your taxable income.

Tax deferral. Growth of contributions is tax-deferred.

Cons of a defined benefit Plan:

Expensive. Defined benefit plans are complicated to set up and somewhat costly to run.

Little wiggle room. You commit to funding the plan at a certain level, and you are stuck with that even in a year when money is tight.

You must offer this plan to any employee. You must make contributions on their behalf. This can get very expensive.

Bottom line: This plan is great for solo self-employed workers who have high, stable incomes and want to put a lot away for retirement.

Saving for retirement by contributing to one of these plans reduces your taxable income and can even bring you to a lower tax bracket. This will save you a lot of money in the short term, while benefiting your financial stability for the long term.